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Asian stocks edge up, Greek woes weigh on euro

Wednesday, January 7, 2015 - 11:13
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Asian markets staged a mild recovery Wednesday, but traders remained nervous after oil prices hit new five-and-a-half-year lows and Greek political turmoil sent the euro skidding.

[HONG KONG] Asian markets staged a mild recovery Wednesday, but traders remained nervous after oil prices hit new five-and-a-half-year lows and Greek political turmoil sent the euro skidding.

More losses on Wall Street and in Europe kept investors on edge as they awaited the release of US Federal Reserve minutes later in the day and jobs data on Friday.

Tokyo added 0.54 per cent by the break, Hong Kong was flat, Shanghai gained 0.51 per cent and Seoul put on 0.18 per cent while Sydney was 0.40 per cent lower.

"With the US markets again under pressure, the lead for Asia looks bleak," Evan Lucas, a markets strategist in Melbourne at IG, told Bloomberg News. "Until oil finds bottoms, the markets will remain in a downward trajectory." Global stock markets have been routed at the start of the year as oil prices continue to slump - losing more than 50 per cent since June - and dealers take profits after some healthy gains in 2014.

On Tuesday the two main oil contracts, West Texas Intermediate and Brent North Sea crude, sank more than two dollars owing to a supply glut, concerns about the economies of Europe, China and Japan and in Greece.

In early Asian trade Wednesday, WTI, the US benchmark for delivery in February, edged up three cents to US$47.96 - just off lows not seen since April 2009.

Brent for February fell 15 US cents to US$50.95 - its lowest since May 2009.

US shares provided a negative platform, with Wall Street's three main indexes taking a blow from the crude plunge, while data showed growth in the service sector slowed in December.

The Dow fell 0.74 per cent, the S&P 500 lost 0.89 per cent and the Nasdaq sank 1.29 per cent.

On currency markets the euro faced further selling pressure owing to the oil losses as well as fears that Greece could exit the eurozone if an anti-austerity opposition party wins a general election later in the month.

Analysts have warned a victory for the far-left Syriza party could see them tear up stringent measures required under the IMF-EU bailout of the country, which could in turn lead it out of the currency bloc.

A weekend report in Germany's Der Spiegel quoted Berlin sources as saying they consider Greece's exit "almost inevitable" if Syriza wins.

The euro fell to US$1.1839 at one point in morning Asian trade - its lowest since February 2006 - before recovering to US$1.1875. It had finished at US$1.1892 in New York Tuesday.

It also fell to 140.83 yen from 140.93 yen in US trade.

The dollar was at 118.64 yen early Wednesday against 118.50 yen in New York Gold was at US$1,216.67 an ounce, compared with US$1,210.89 on Tuesday.

AFP